assume that both boom and bust are equally likely and that the risk free rate is 7.88 percent. what is the alpha of the stock
Choose the correct statement defining alpha.

a) Alpha is the expected rate of return on a risk-free investment.
b) Alpha is the excess return of a stock over its expected return given its level of risk.
c) Alpha is the probability of a positive return on a risky investment.
d) Alpha is the measure of systematic risk associated with a stock.